Tesla shares moved higher in early Tuesday trading, extending their 2025 advance past 15%, following a key price target upgrade from a top Wall Street analyst ahead of the group’s fourth quarter earnings later next week.
Tesla (TSLA) remains one of the market’s biggest post-election gainers, adding more than $560 billion in value since the close of trading on Nov. 4, as investors continue to bet that Elon Musk’s close ties with President Donald Trump, and his key advisory role to the new administration, will benefit both the automaker and his myriad portfolio of businesses and investments.
Analysts are also betting on further gains powered by Musk’s broader ambitions in artificial intelligence, self-driving software and robotics, each of which could benefit from looser regulations under the Trump administration.
That could partly offset the impact of narrowing profit margins and slowing demand in its legacy EV business, which posted its first-ever annual sales decline despite solid gains in China and price cuts in major markets worldwide.
Elon Musk has emerged as a key ally, and high-level administration advisor, to President Donald Trump.
Piper Sandler analyst Alexander Potter, who added $185 to his Tesla price target, taking it to $500 per share in a note published Tuesday, said investors are now “more willing to entertain upside scenarios” based on the potential of the group’s “‘real-world’ artificial intelligence.”
AI profit potential ‘compelling’
Potter argues that while Tesla’s near-term outlook is “highly uncertain”, given the pullback in EV demand and questions tied to the launch of a lower-priced unit later this year, the group’s shift in focus towards AI-powered gains remains compelling.
Tesla is likely to deliver around 1.96 million vehicles this year, Potter estimates, an 11.4% advance from 2024 levels, with “>100,000 incremental units to come from unknown vehicles, and another 70,000 incremental units from Cybertruck.”
Musk, however, continues to stress that Tesla’s longer-term prospects are more aligned to his ambitions for AI technologies, cybertaxis, energy storage and robotics than legacy carmaking.
Related: Top analyst reworks Tesla stock price, rating with Q4 earnings on deck
Musk says the group will produce as many as 2 million autonomous Cybercabs a year by 2026 and insists that a “20% to 30% vehicle growth next year” is likely, absent “some force majeure events, like some big war breaks out or interest rates go sky high or something like that.”
“Once Tesla fulfills its current launch pipeline, management’s focus will shift away from launching new cars and toward popularizing full self-driving software,” Potter said.
“To reflect this, we are now modeling a contribution from full self-driving licensing and value Tesla’s existing businesses at just below $300 per share, inclusive of full self-driving.”
Choppy Tesla trading in early 2025
Potter says the stock is likely to be “choppy” over the first half of the year, as the EV market uncertainties impact sentiment, but remains convince that Tesla is a top “buy-and-hold idea” for 2025.
Tesla is slated to post its detailed fourth-quarter earnings after the close of trading on Jan. 29, with analysts looking for a bottom line of 72 cents a share on revenue of $27.23 billion.
Related: Analysts deliver new auto insights following CES, shed doubt on Tesla
Gross profit margins, meanwhile, are forecast to widen modestly to 18.85%, according to LSEG data.
Tesla shares were marked 1.9% higher in premarket trading to indicate an opening bell price of $434.65 each.
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